Financial Update Q1 FY20 NYSE: CRM @Salesforce_ir
Safe Harbor "Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements about our financial and operating results, which may include expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, expected revenue growth, expected current remaining performance obligation growth, expected tax rates, the one- time accounting non-cash charge that will be incurred in connection with the Salesforce.org combination; stock-based compensation expenses, amortization of purchased intangibles, shares outstanding, market growth and sustainability goals. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include -- but are not limited to -- risks associated with the effect of general economic and market conditions; the impact of geopolitical events; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our business strategy and our plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms; the pace of change and innovation in enterprise cloud computing services; the seasonal nature of our sales cycles; the competitive nature of the market in which we participate; our international expansion strategy; our service performance and security, including the resources and costs required to avoid unanticipated downtime and prevent, detect and remediate potential security breaches; the expenses associated with new data centers and third-party infrastructure providers; additional data center capacity; real estate and office facilities space; our operating results and cash flows; new services and product features; our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; the performance and fair value of our investments in complementary businesses through our strategic investment portfolio; our ability to realize the benefits from strategic partnerships, joint ventures and investments; the impact of future gains or losses from our strategic investment portfolio, including gains or losses from overall market conditions that may affect the publicly traded companies within the company's strategic investment portfolio; our ability to execute our business plans; our ability to successfully integrate acquired businesses and technologies; our ability to continue to grow unearned revenue and remaining performance obligation; our ability to protect our intellectual property rights; our ability to develop our brands; our reliance on third-party hardware, software and platform providers; our dependency on the development and maintenance of the infrastructure of the Internet; the effect of evolving domestic and foreign government regulations, including those related to the provision of services on the Internet, those related to accessing the Internet, and those addressing data privacy, cross-border data transfers and import and export controls; the valuation of our deferred tax assets and the release of related valuation allowances; the potential availability of additional tax assets in the future; the impact of new accounting pronouncements and tax laws; uncertainties affecting our ability to estimate our tax rate; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; factors related to our outstanding debt, revolving credit facility, term loan and loan associated with 50 Fremont; compliance with our debt covenants and lease obligations; current and potential litigation involving us; and the impact of climate change. Further information on these and other factors that could affect the company’s financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Information section of the company’s website at www.salesforce.com/investor. Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law. 2
Company Overview Delivering durable growth at scale - Salesforce is the #1 CRM software provider based on total software revenue worldwide in 2018 1 - CRM is the fastest growing segment in Enterprise Software (projected CAGR of 12% 2018 – 2022) 2 - Consistently delivering durable revenue growth , more than doubling from $5.4 billion in FY15 to $13.3 billion FY19 - Driving towards a long-term revenue goal of $26 billion to $28 billion in FY23 - Uniquely positioned to help our customers drive broad-based digital transformation #1 Top 50 World’s Most Best Places to Work Companies that Care In Collaboration with Innovative Companies for LGBTQ Equality #1 The Future 50 1 Source: Gartner, Market Share: All Software Markets, Worldwide, 2018, April 2019. 2 Sources: Gartner, Forecast: Enterprise Application Software, Worldwide, 2017-2023, 1Q19 Update, March 2019. Gartner, Forecast: Enterprise Infrastructure Software, Worldwide, 2017-2023, 1Q19 Update, March 2019. 3
Financial Overview Quarterly Results 4
Q1 FY20 Results Highlights Durable top-line and operating cash flow growth • Revenue of $3.74 billion , up 24% year-over-year, 26% in constant currency 1 • Current Remaining Performance Obligation of approximately $11.8 Billion, up 23% Year-Over-Year, 24% in Constant Currency 1 • Remaining Performance Obligation of approximately $24.9 billion , up 22% year-over-year • Operating Cash Flow of $1.97 Billion , up 34% year-over-year • Guidance 2 o FY20 Revenue of $16.10 billion to $16.25 billion, 21% - 22% year-over-year growth, respectively o FY20 GAAP EPS of $0.78 to $0.80 o FY20 Non-GAAP EPS of $2.88 to $2.90 3 o FY20 Operating Cash Flow growth of 20% - 21% o Q2 FY20 Revenue of $3.94 billion - $3.95 billion o Q2 FY20 Current Remaining Performance Obligation growth of 20% - 21% year-over-year 1 Refer to slides 9 and 10 for an explanation of non-GAAP constant currency (“CC”) growth rates for revenue and current remaining performance obligation, respectively. 2 Guidance provided June 4, 2019. This guidance does not reflect any potential future gains or losses on our strategic investment portfolio resulting from the future impact of ASU 2016-01 as it is not possible to forecast future gains and losses, and is based on estimated GAAP tax rates that reflect the company’s currently available information, and excludes forecasted discrete tax items such as excess tax benefits from stock-based compensation. The GAAP tax rates may fluctuate due to future acquisitions or other transactions. 3 Non-GAAP EPS is a non-GAAP financial measure. Refer to the Appendix for an explanation of non-GAAP financial measures, and why we believe these measures can be useful, as well as a 5 reconciliation of non-GAAP financial measures to the most comparable GAAP measures, when applicable.
Q1 FY20 Financial Summary GAAP Non-GAAP 1 Quarterly Results Increase Y/Y Quarterly Results Increase Y/Y Revenue $3,737M 24% $3,798M 26% CC $11.8B 23% N/A 24% CC Current Remaining Performance Obligation 2 $24.9B 22% N/A N/A Total Remaining Performance Obligation 2 5.6% (73) bps 18.2% 3 122 bps Operating Margin $0.49 4 $0.93 4 6.5% 26% Diluted Earnings Per Share $1,965M 34% N/A N/A Operating Cash Flow 1 The Non-GAAP columns present only non-GAAP financial metrics and the related non-GAAP growth rates as compared to prior periods. Non-GAAP revenue and non-GAAP current remaining performance obligation (CRPO) represent CC results. Refer to slides 9 and 10 for explanations of non-GAAP CC revenue growth and non-GAAP CC CRPO growth, respectively. Non-GAAP operating margin and non-GAAP EPS are non-GAAP financial measures. Refer to the Appendix for an explanation of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most comparable GAAP measures, when applicable. 2 Remaining Performance Obligation is a new disclosure effective Q1 FY19. Refer to slide 10 for additional discussion. 6 3 Non-GAAP Operating Margin is the proportion of non-GAAP income from operations as a percentage of GAAP revenue. 4 Diluted EPS is calculated using GAAP revenue.
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